Japan's Nikkei average hit its lowest point in two months today, with shares of exporters hurt by a stronger yen, while uncertainty about the policies of the country's new government dampened investor confidence.
Banking shares, including Mitsubishi UFJ Financial Group, lost ground on a string of events including financial services minister Shizuka Kamei's interest in introducing a moratorium on the repayment of the principal on mortgages and bank loans to help small and midsize businesses.
The benchmark Nikkei began the second half of Japan's fiscal year on a weak note, sliding 1.6 per cent to 9,974.45, after briefly touching 9,965.06, its lowest since July 24th.
The broader Topix fell 1.5 per cent to 895.92.
Market players also said Tokyo shares were likely lifted the previous day on window-dressing buying at the end of Japan's fiscal half-year, and that their weakness may be partly due to such buying has dissipating.
Little impact was seen from the Bank of Japan's closely watched tankan survey, which showed that Japanese business confidence improved as expected in the three months to September.
US stocks fell yesterday after a surprising contraction in an index of Midwest business activity, but buying of technology bellwethers like Cisco Systems at the end of a strong quarter limited losses.
A focal point in the near term will be forthcoming US economic indicators including jobs data on Friday, as well as fluctuations in the yen.
The yen stood around 89.90 yen to the dollar today, after hitting an eight-month high against the greenback of 88.23 yen on trading platform EBS on Monday.
Investors fret about a stronger yen as it eats into exporters' profits when they are repatriated, and many Japanese exporters have set their exchange rate assumptions for the dollar around 90-95 yen for the current fiscal year to March.
Reuters